Chapter 41: Restoring National Sovereignty with a Truly National Banking System

What did William Jennings Bryan suggest that won him the Democratic nomination in 1896? What semantic trick had been used to subvert the Constitution? How much of the money supply is created directly by the Federal Reserve? How is the rest created? What do most people think that banks do now?

When the Bank of England was nationalized in 1946, why did it not change very much? Why did James Robertson call this “a grossly unfair windfall to the banks?” What was Robertson’s proposal? What did critics of it claim? What did the Shadow Chancellor of the Exchequer warn? Would the British economy collapse? Why?

What was a similar solution proposed in the US called, and who developed it? What happened to this person? Who revived the idea and how did he envision it? What would the American Monetary Act, developed by Stephen Zarlenga and the American Monetary Institute, require for checking accounts? How would Patrick Carmack’s Monetary Reform Act go even farther?

Who was responsible for destroying Japan’s financial system and how? Do you think there’s more to that story? If bank loans totaled $6 trillion in 2007, what were mortgages alone in 2008 at the height of the housing bubble? Why would banks need to borrow 90% of this money under a 100% fractional reserve system? Could this be gotten around if counties simply inherited the assets?

Would this be better than selling the assets to bondholders as securitized debt obligations? If the cost of retirement and healthcare could be cut in half, would that be better than giving bondholders 2-3% on their money? Would lowering the cost of living be a more equitable solution than giving interest at all?

Ellen Brown suggests that the 300-year fractional reserve Ponzi scheme has reached its mathematical end point and the banks are already bankrupt. Do you agree? Who warned in 2007 of a meltdown of the financial system and what were his credentials? What is the Islamic model of banking? Could county banks become hubs of self-organized investment clubs who take their own risks but get help in writing contracts and doing credit checks?

Discussion question: are government bonds borrowing from the next generation to benefit the current one? In a non-inflationary economy, do they make sense? Should major projects be funded as they go?

How did the US Postal Savings System operate from 1911 to 1967? Why was it developed? What do you think of this arrangement, with the steady interest rate and cap on savings? How was it made obsolete? What do you think of banks getting the benefit of higher interest rates for lending but the government guaranteeing the loans?

Describe how it would work, according to Professor Guttman, explaining terms like the float and overnight sweep. Brown claims that credit cards are necessary. Should credit be an everyday method of managing finances in a functional economy, or only reserved for emergencies? Could a different system be devised for private lending at a reasonable rate with protections for borrower and lender?

How could existing bank branches be picked up by local governments? Why does the money supply expand if loans and repayments zero out? Describe the LETS system. Would the LETS system work on a national scale? Or would the banking system work better on a local scale?

To what did Benjamin Franklin attribute the success of the young colonies? What was it called and how did it work? How did Roger Langrick explain the impossible contract problem? What is his solution and how does Brown critique it?

Describe the wicked witch of the west and Glinda, the good witch of the south’s approach to economics. Is it clear that economics is the means of governance and not independent from it? What does this say about trying to control economics through politics in the US?

Now imagine Persephone, the populist witch of the Pacific. Instead of lending any money into existence she uses the existing debts to spend the money into existence so the people can phase out debt itself. Instead of a 10% interest, a 10% tax pays half for government services for everyone and half for targeted social services. Which would be better?

How does The Project for a New American Century view national defense? How does this relate to Iran’s stance on usury? How have Islamic banks gotten around the prohibition against usury? What’s the maximum they can increase the price by? If paid over 30 years, what interest rate does this compare to?

Who has interest-free savings and loan associations? What is the incentive to loan if there’s no benefit? What happens in a default – do lenders lose their savings? Why would a government prefer to give interest-free loans for private profit rather than retaining ownership of the business and issuing money to pay workers and management?

Ellen Brown suggests that eliminating interest charges would cut the cost of state and local infrastructure in half, therefore reducing taxes. Sustainable energy and affordable housing would be possible for everyone, and inflation might be eliminated. Do you see any flaws in her logic? How would this affect the circulation of money? What hazards does she mention?

What was Australia’s Commonwealth Bank? If the bank charges a fraction of a percent in order to fund a non-defensive war, does that save the people money or cost them? Would it be better to give local governments, like Alberta, Canada, the power to create money, rather than the national government creating it and loaning it to them with interest?

How does Betty Reid Mandell, author of Selling Uncle Sam, compare to the CEO of Enron in the Wizards of Money episode? What does Catherine Austin Fitts say about HUD? In your experience, do government agencies have restrictions on hiring and firing that make them less innovative and flexible, or more fair and competitive? Could the domination by one class or race be avoided by allowing any community the right to secede and control their own debt assets?

How would it affect M1, M2 and M3 to buy back government bonds with cash?

Calculator question: Divide $40 trillion of M3 by the 312 million people in the US. If this amount per person circulated 10X in the US economy, what would be the average income? Does this seem practical? Now divide the $1.5 trillion said to be in circulation in the US by 312 million people. Multiply it by 10. Is this more realistic?

How does the Social Security trust fund compare to the money in circulation? If the Fed issued $26 trillion to banks and corporations, could they also issue enough to pay back the trust fund?

Would it be better for the Federal government to pay the accrued amounts of Social Security back to the counties to have them administer the program, or to phase it out by having the Federal government continue to provide benefits for those past a certain age?

Let’s examine Mike Ruppert’s claim that $1 trillion of the US economy is money-laundering. Could the primary function of the entire consumer market be money-laundering? The military (M1) takes the resources of third-world countries. This forces them to work for corporations to make goods (M3). But these stolen goods and resources have to be fenced (M2) in order to generate “legitimate” profits and pay for more military (M1). That’s where we come in.

Is it more dangerous to back the dollar with “the full faith and credit of the United States” rather than a privately-owned Federal Reserve? Do we perhaps want to transition M1 only from a military-consumer economy into a producer economy, and let M2 and M3 fail?

Who owns the foreign central (as opposed to national) banks? Is this who you want to give your money to? If a tsunami of US dollars hits our shore, what will happen to housing prices? Will it REALLY be a good thing to have homeowners go further in debt to the banks because they can? Will they or the banks end up owning their homes? Will they also buy up our agricultural land? Will we have anything left?

Ellen Brown says that there’s not much we can do about foreign ownership of US assets, other than imposing high tariffs or making foreign ownership illegal. Is this true? Could we not put limits on how much return on investment is enough, and reclaim those that have exceeded it? Could the Federal Reserve issue the money for each county to buy back their assets from foreign owners? Could lawsuits be filed against corporations that have harmed the environment, to be paid in assets rather than cash? If counties own the assets, rather than the Federal government, they wouldn’t be liable to be appropriated in a bankruptcy.

Does Brown mistake the purpose of the stock market, when she thinks that holders of foreign debt would invest in it? Is its purpose the laundering of money through venture funds that get sold to suckers like us and our 401K and pension funds?

Chapter 40: “Helicopter” Money: The Fed’s New Hot Air Balloon

If Ben Bernanke’s “helicopter drop” was done by the counties to “acquire existing real or financial assets,” would this be a good thing? Could we localize rather than nationalize “essential industries that had been monopolized by giant private cartels” including media, telecom and internet services, and pharmaceuticals?

If Japan created 35 trillion yen in 15 months for 127 million people, how much is that per person? Was Japan’s deflation because, like the US now, they’re a consumer society? Did the Bank of Japan reflation of the US dollar simply keep the calliope going for another few whirls, so it could spin off more real assets to the bankers?

Do we trust big government “with sweeping powers to declare and conduct wars, provide for the general welfare, and establish and enforce laws?” Should we then trust them to create the national money supply?

Brown gives only three options for creating the money supply: a private banking cartel, local communities, or a centralized representative government. She seems to think that people are more trustworthy and accountable in large masses. Do you agree?

Who were the Goldbugs and where did the term come from? Who were the Greenbackers and how did Vernon Parrington summarize their position? Was the burden of the “difficult and often dangerous circumstances” under which gold was extracted borne by the Goldbugs?

How did the scarcity of gold lead into dishonest money, according to Stephen Zarlenga? Why did paper credits need to be mixed with the gold? Today who are the goldbugs? Why does Machiavelli prophesy that reformers have an uphill battle?

How did the real estate market in Vietnam demonstrate the problem with a gold-peg? What did the price of gold surge to in the ’70’s and return to in 2001? What is the advantage of an expandable currency? How did the Greenbackers view money, similar to the medieval tally system? What happened when the “Founding Fathers” adopted a precious metal standard at the Constitutional Convention?

Describe the scenario of being shipwrecked with a chest of gold coins. Do you see any flaw in the logic? Do you see any flaw in the tally-stick scenario?

Ellen Brown puts M3 at $12 trillion. What is it known to be now? Why was gold able to function well as a currency up until WWI? How is the “real bills” doctrine used by the Federal Reserve to advance credit today? How has that led to the current crisis? What do you think of the Kilowatt Card concept?

Explain the NESARA bill and what it stands for. What does Ellen Brown say the real problem is with the US currency?

Imagine a county e-currency in which no more than 6000 units per resident was ever generated. No one from the outside could buy e-credits, which would only exist as accounts at the county-owned bank. E-credits could be bought back by the county government at $1 per credit and recirculated in the local economy. But preferential tax breaks would encourage local spending instead. Would this currency be subject to inflation or deflation? What would happen to it if the US dollar inflates? Could vendors post a different price in e-currency and US dollars?

Chapter 38 The Federal Debt: A Case of Disorganized Thinking

How much of the public portion of the debt is owed to foreign investors? What does Al Martin say that the income tax would need to be just to service the debt in 2013? Who authorized his study, which found that US citizens are left with “supersized bubbles and really scary economic numbers?”

What is another grave threat to the US dollar? What did John Pilger say about the conflict with Iran and Iraq? How much was the US foreign debt in 2005, according to Mike Whitney? How does Ellen Brown suggest repaying the debt?

How might the Caribbean hedge funds have been buying up US debt for the US Treasury? How would this have worked when Venezuela dumped $20 billion US? What’s the significance of March 2006 being the date that the Fed stopped reporting M3?

What was the Coinage Subcommittee’s answer to the debt? What drawback did it have? If the US Treasury made an accounting entry to pay off the debt, would that fix the problem? Which Goldbug and which Greenbacker agree that fiat money is the only way to pay off the debt?

If the US converted Federal Reserve bills to US Treasury bills, would it convert the $11 trillion held in tax havens? The $26 trillion issued to banks and corporations? Would the $600 trillion in derivatives be collectible or only the ones buried in deposit accounts and covered by FICA?

Once the full faith and guarantee of the American people backs the currency that was issued by the banks, will we need to compete with these fortunes in order to buy US real estate? Water rights? Politicians?

Would it be better to allow the bank-issued currency to hyperinflate and float away, while protecting our local assets by transferring them to county governments as the banks go bankrupt?

What is Frank Baum an example of? Was FDR right that fear was the only thing they had to fear in the Depression? Was Carnegie, in your opinion, a philanthropist who truly believed that everyone could become a millionaire if they thought their way into it?

In the eighteenth century Benjamin Franklin said that the real shortage was in the means of exchange. Is that true in the US today? If M3 went from $14 trillion in 2007 to $40 trillion in 2010 (with the $26 trillion secretly issued by the Fed) how does it compare to the 41% rate of growth reported by reliable sources? What would it be by now? Compare this to an M3 of “only” $7 trillion when the WTC towers fell.

The video from last class “Let Your Life Be a Friction…” warns about the violent repression that would answer a revolution, but says that it’s the only way. Ellen Brown says that the internet is the peaceful revolution changing the “principles, opinions, sentiments, and affections of the people,” in John Adam’s words. What do you think? How important does this make internet privacy?

Did Professor Auriti truly bring prosperity to Guardiagrele, Italy? What’s the fly in the magic ointment? If the government had issued the money, would that have solved the problem?

What is NORFED? What happened to the Liberty Dollars? What did Ron Paul say about the “Free Competition in Currency Act?” What are some problems with precious metal coins? Does online E-gold solve this problem? Should we be giving all our money for tradable receipts that say we have gold in a London vault? Are these and the mining companies the ones we want to have prosper?

How does the Grameen Bank work? Where does it get the money to loan? Is it a fractional reserve bank?

Chapter 36: The Community Currency Movement: Sidestepping the Debt Web with “Parallel” Currencies

Is the ideal group for a monetary system the larger community called a nation? Is that as true when it’s 300 million people? How many countries do community currencies operate legally in? How many local exchange programs are there? If these currencies and exchanges are taxed the same as money, does it solve the problem?

What did Argentina develop to deal with the IMF-imposed peso crisis? What did it become with how many members? What did their “debt-cancelling bonds” resemble? What was a flaw of the system? How could that be countered today?

How many paper currencies exist in North America? Describe how the Ithaca HOUR works. What’s an advantage of Edgar Cahn’s Time Dollar? How did a Berkshire Farm Preserve Note work? Is there a drawback you can see to the “caring relationship tickets” that Bernard Lietaer writes about?

Comment on the carbon credit model and how it differs from the corporate carbon credit. What is LETS? Are there drawbacks that you see to it?

Benjamin Franklin said that credit turns prosperity tomorrow into ready money today. What’s the difference, then, between credit and debt? Instead of either could money be put into circulation as receipts? How could such a system be designed to support both community functions and decentralized distribution?

Tom Greco outlines three ways to have credit (i.e. debt) money circulate without the danger of default. What are these? Critique each yourself. What are Ellen Brown’s critiques?

Islamic law, like Judaism and Christianity, forbids usury. All three have found loopholes. Would it be better to put universal limits on usury and phase it out?

Ellen Brown states that the national currency must be reformed because taxes, mortgages, telephone, energy, gasoline and anything else not made in the local economy must still be paid in it. Can the national currency be reformed? Could this problem be solved by relocalizing taxes, mortgages, telephone service, energy, fuel, and production?

What is the Plunge Protection Team? How do they “maintain investor confidence?” Whose money do they use? What specific device do they use to support the stock market?

Who are the PPT’s “primary dealers?” What is a repo? How do they work? Thought question: Does this seem similar to how Rothschild first gained control of the monetary system?

How is gold affected? What would a soaring price of gold do to the housing market and taxpayers? Why don’t stock traders complain? What’s the eventual outcome likely to be?

What is moral hazard? How are the PPT’s primary dealers and the government comparable to Mafia-controlled gambling? How can they eliminate competition that refuses to be bought? Thought question: Do banks monetize Federal funds or do US citizens monetize the presto-chango accounting dollars of the banks?

What is the Exchange Stabilization Fund? Who are three Goldman Sachs execs who have been the Treasury Secretary? What has the US Treasury been called?

What does CRMPG stand for and why was it set up? What is program trading and how does it relate to the CRMPG? How did program trading change between 2002 and 2006? What does “financial stability” really mean in banker jargon? How does this affect small investors?

If the stock market were allowed to crash what would happen to the real economy? What did Addison Wiggen predict in The Demise of the Dollar?

How are Rockefeller and the US intertwined? What does Hans Schicht say that the US is now? What is an alternative prognosis put forward by Richard Freeman? How does he describe the Cayman Islands and those who run them? How does this $30 trillion figure into our estimates of M3? What is the impact of this remote band of modern-day pirates?

How does Adrian Douglas describe the Bear Stearns debacle over derivatives? Why is it like a Katrina hitting every city on the same day? Why is the stock market now like an EKG on a patient who’s dies? What strategy would the Fed need to employ to keep interest from rising? What is ungluing the whole sham?

Chapter 34: Meltdown: The Secret Bankruptcy of the Banks

When did the banks actually go bankrupt, according to John Hoefle? What was the first bailout that started the snowball? What bank was secretly taken over by the Fed in 1989? What does he describe as “shotgun mergers and backdoor bailouts?” What created the zombie banks?

By 2002 how much had the number of banks contracted by? What about the top banks? Why was Bank One’s acquisition of MP Morgan Chase ludicrous? What would happen if US markets were not manipulated? What have banks become?

When Ellen Brown writes, “The Federal Reserve was instituted… to prevent [bank] runs” does she seem to be forgetting her earlier chapters? What does Robert Guttman say will replace the deposit and lending function of banks? Does this seem likely to you? Are private, small-time investors protected by law?

How did the 1999 repeal of Glass-Steagall help banks regain their losses in commercial lending from less-regulated global investment banks? Why did the share values of commercial-investment banks fall anyway?

Discussion question: If banking is a public service and not a profit center, should it be a function of (local) government? Rather than the activities we think of as banking what are the four primary activities that banks engage in?

What does Patrick Byrne state that 75% of investment bank profits come from? Where did the “too big to fail” concept come from? Who owned a large chunk of Salomon Brothers when they were caught submitting false bids for US Treasury securities? Does this make you doubt his motives in wanting to pay more taxes?

What is JP Morgan’s derivatives exposure and what assets is it funded by? Would taxing the rich solve the problem? What cost Bush Sr. a second term? Given what you know from the audit of the Fed, should anyone want to buy US bonds? Has the banking system been nationalized?

Why does Murray Rothbard say that all banks are bankrupt? Are the global mega-banks indispensible to the economy? What is Ellen Brown’s alternative to the bail outs?

What do some recommend that we do to protect ourselves? While these are worthwhile what’s the drawback of these individual solutions? What’s the illusion that’s tricked us into submission?

How can inflation and deflation happen at the same time? What is stagflation? How much did the GAO predict in 2005 that the housing market might decline by? What would be the effect of this?

What led to the rise in housing prices in 2001? By 2005 what percentage of new mortgages were high-risk adjustable and interest-only? By how much had the average house appreciated from 1997 to 2005?

Who profited by low interest rates and tax cuts? What investments suffered from which demographic? How did it effect both the investment and the investors? How did it affect foreign investors and what role do they play in the US government?

Explain the relationship between interest rates, the national debt, foreclosures, and credit-money. What was the equity-to-debt ratio in 1990 to 2005, and why? What would 20 million defaults do to the money supply, according to Alan Greenspan?

How does Yves Smith analysis of the mortgage settlement bear on the question of whether it was relief for homeowners or a bailout for the banks? Why do the banks have to pay so little yet get credited for so much more? What does Attorney General Kamala Harris say about Fannie and Freddie Mac?

How did Fannie and Freddie expand the housing bubble? How large are they? Are they private, public or both? How did loans work under Fannie Mae in the ’70’s? What changed in the ’80’s? Explain what an MBS is. Who buys them and who’s responsible if they default?

What is a collateralized mortgage obligation and how do they differ from an MBS? Are they assets? Why were they particularly risky? How much did Fannie Mae owe in bonds on what amount of mortgages? What was the risk of a substantial number of defaults? How much had they guaranteed in Mortgage-Backed Securities and how much in derivative obligations?

What happened in 2003 to Freddie Mac and in 2004 to Fannie? How much did they pay? Was this enough? Describe the scenario when a mortgage that’s been bundled and sold goes into default. Why is the public damned if they do (foreclose) and damned if they don’t?

Chapter 32: In the Eye of the Cyclone: How the Derivatives Crisis Has Gridlocked the Banking System

What does the financial derivatives market make a mockery of? What does Martin Weiss compare it to? John Hoefle? Colt Bagley? How much money is in the derivatives market currently? (Answer here.)

How is the derivatives market connected to tuition hikes? How has liquidity been affected by the derivatives crisis? Why has the Fed bailed out losing counterparties like the hedge fund LTCM?

Did the 1998 LTCM bailout solve the problem or “kick the can down the road?” Describe what happened in 2005. Why did the Fed stop reporting M3 in March 2006? Speculative question: Why did it take them a year and nine months – December 2007 – to start issuing $16 trillion in what they call “broad-based emergency programs?”

What did it mean that Nixon closed the gold window internationally and FDR closed it domestically? What happened after each of their actions? What does “Weimar Republic II” refer to?

What international action also happened in March 2006 that may have prompted this reaction? What’s the significance of this to the dollar? Research question: What country did the same thing at an earlier date and what was the US reaction to it?

Why might the Fed print $2 trillion in cash rather than create it electronically? For a graphic representation of a trillion in cash go to Oto Godfrey’s website.

What economic indicators turned around in the summer of 2006? Who became the treasury secretary in May? What change was anticipated in November?

What does Catherine Austin Fitts say is used in the “Orwellian scenario” to keep the value of financial assets up? Does this also keep the dollar able to buy third-world consumer goods? What does she say it leads to?

Thought question: If the “IMF riot” is anticipated as a way of ushering in domestic security measures, does it follow the Naomi Klein Shock Doctrine of disaster opportunism? What does “posse comitatus” mean and how was it violated after Hurricane Katrina?

What was Henry Kissinger taped saying at a 1992 Bilderberger meeting? Why does Al Martin speculate that FEMA may be militarized in the future (and Homeland Security already designated as disaster response)?

How does Henry C.K. Liu use physics to describe the topsy-turvy world where debt creates money? If money was community-issued tradable receipts for goods and services, would it avoid the matter-antimatter collision?

What are alternatives for pumping liquidity back into the system? Which of these has the US government not done?

In the TEDx talk, Jon Jandai says that he spent two hours a day for two months building a house, which saved him 29 years and 10 months from the normal method of buying it. He also has many enlightening things to say about universities being hard because they’re boring and because the material learned is destructive. The Pun Pun Center for Self Reliance is a small organic farm, seed saving center and sustainable living and learning center started by Jon Jandai and his wife.

I also did some research on whether the word mortgage really does mean death grip. Dear Word Detective: What is the origin and true definition of the word “mortgage”? We’ve heard that it is from the Latin roots “mort” (death) and “gage” (grip). Is this true? — Brad Hubbell.

Not exactly, by which I mean that there are things that are literally, indisputably true (such as raspberry being the best flavor of jelly doughnut), and then there are propositions that, while perhaps not entirely true per se, embody a higher sort of truth.

The first part of “mortgage,” the “mort” part, does indeed mean “death” or “dead” in both Latin and Old French (from which we borrowed “mortgage” back in the 14th century). But the “gage” part has nothing to do with “grip.” A “gage” is a pledge or, particularly, something of value offered to ensure payment of a debt, and comes from an old Germanic word (“wathjam”) that also gave us the English words “wed” (as in “wedding,” a ceremony of pledging) and “wage.”

The logic of “mortgage” is that of a “dead pledge,” meaning that if the borrower repays the loan as agreed, the property becomes “dead” to the lender, who has no further rights to it. And if the borrower fails to pay, all of his or her rights to the property cease.

So the mortgage is also marrying death or the wages of death? An equally convoluted explanation is that the eldest son would borrow money and pay it back when he came into his inheritance at his father’s death. Or mortgage may come from “mortmain” which is literally ‘dead hand': ownership of the property by a corporation or church that wasn’t a living person. Any of these twist my brain into a pretzel trying to make sense of them. And why is it half-Latin/French and half Germanic?

Other sources say that the mortgage was a death pledge because the borrower was more likely to die than pay off the loan. Robert Side writes in the UK forum Urban 75 under “Mortgage means Death Pledge or Death Grip”:

In medieval times mortgages were a method of raising money on a property that you already owned outright if you had fallen on hard times. It was seen as a last resort. When we remember that mortgages provide the country with 60% of its money supply, it seems reasonable to assume that any loosening of the criteria for borrowing served a definite political and economic objective. Relaxation of the rules has certainly led to a massive expansion of the money supply by making it possible for people to take on previously unthinkable quantities of debt. For banks, the property bubble is a huge money-creation bonanza- for the government , it’s a valuable source of revenue, as stamp duty and capital gains tax roll in, and inheritance tax threshholds fail to keep up with grossly inflated house prices. Not to mention the fact that all the debt -soaked property ‘owners’ are obligingly taking on, at their own risk and expense, money supply duties which should be shouldered by a public authority. As long as governments rely on systemic debt to put money into the economy it is in their interests to keep mortgage lending high and you and your children will be the ones to suffer.

Just after the 2nd world war almost half the money in the uk was debt free so it was uneffected by any credit squeeze; now its only 3%. In my opinion a democratically elected government should shoulder the responsibility of spending money into existence, not lending and then collecting interest. The exponential increase in the money supply is detrimental to the environment and is a ‘moral hazard’ to the banking world, never mind the public. The Money Reform Party exists to educate the British people and their polititions about the nature and origin of the money supply. It’s against the creation of of it by private banks. See also: The ‘Web of Debt’ by Ellen H. Brown.

The book that seems to be a UK-companion to Web of Debt is The Grip of Death by Michael Rowbotham. This very informative review indicates that it’s well worth reading, and not only explains why a debt-based monetary system is fundamentally insolvent, but what we can do about it. Rowbotham writes:

‘The Grip of Death’ is a literal translation of ‘mortgage’, when the owner of a house pledges his or her house to another with a handshake…unto death.

…

Reform of the debt-based financial system is clearly not a minor issue. It is not a matter of fiddling around with taxes, incomes and allowances to make things apparently more equal, more efficient, or perhaps more straightforward.Changing the debt-based financial system involves gradually altering the very foundations upon which national and international economics is based. Monetary reform is concerned with attempting to determine a new principle for the supply of money to an economy – the purpose being to create a supportive financial environment in which more constructive economic trends are allowed to emerge, and in which more benign systems of overall economic management become possible. In view of the rapacious onslaught on the environment, the waste of natural resources and the social and political friction caused by de-regulated commerce and capital flows, this is at once a promising, but a sobering prospect.

Posted inMortgages|Comments Off on Glocal Econ 14: Homeland Insecurity and the Mortgage

Also Unwelcome Guests #579 Financial Consolidation (Wars for Profit and More on Primordial Debt) Edward Griffin on the history of banking and Chapter 3 of David Graeber’s Debt: The First 5000 Years.

Questions on Web of Debt

Chapter 30: The Lure in the Consumer Debt Trap: The Illusion of Home Ownership

What percentage of households owned their own homes in 2004? What percentage really owned their homes? Research question: Is this higher or lower today?

How did this affect the debt-to-household income ratio from 1957 to 2002? 1991 to 2001? 2001 to 2004? How does the total mortgage debt compare to the federal debt? Research question: What is it now?

How does the lowering of interest rates affect the stock market? What was the federal funds rate in 2000? How did banks fan the flames of the housing boom? What percentage of mortgages were ARMs?

What happens with an ARM with a five-year teaser rate? How much could interest rates increase by in the sixth year? With a 7% loan how many times the list price will the buyer pay? How about with a 5.3% loan?

How do rising interest rates affect real estate prices? What were the Homestead Laws? How have 30-year mortgages affected housing prices? What would happen if mortgages were ratcheted down to 29 years, 28 years, 27, etc.? How did Craig Harris describe what happened with the real estate market?

What are “securitized” mortgages? What percent of bank lending was in the housing market by 2005? How does the current banking situation relate to the S&L crisis of the mid-1980s according to Gary North? What was the prime raised to at that time? What were the S&Ls earning?

What is a subprime mortgage? Why would a bank loan money at a subprime rate? What ratio of subprime loans were predicted to default in a NY Times article? How many people might that effect? What did Peter Schiff predict? What was his logic?

How is the Federal Reserve related to the housing bubble? What did this creative financing follow in 2000? What does Michael Hudson call “the new road to serfdom?”

Discussion questions: Does the prime or the lending rate need to fluctuate? What would happen if it was held stable at 5%, whether it’s a long-term or short-term loan, so that the interest could never exceed the amount of principal?

Also Unwelcome Guests #576: Is 5000 Years Enough? (Debt, Morality & Fiat Currency) Lectures by William Black and Edward Griffin, reading the first chapter of David Graeber’s Debt: The First 5000 Years.

Also Unwelcome Guests #577: Money=Debt=War (The Rothschild Formula and the Myth of Barter) Continues with Edward Griffin and the second chapter of Debt.

Questions from Web of Debt

Chapter 28: Recovering the Jewel of the British Empire: A People’s Movement Takes Back India

How much of the world’s population do India and China represent combined? According to the PBS documentary Commanding Heights, what was India in the 1950’s after they’d won their independence from Britain? What was recommended for their new economy?

How did Pandhit Nehru, the first Prime Minister, set up India instead? Who helped to shape this government and what was the result?

What was India’s trade balance in 1973? What changed it? How did this affect India’s politics? As described by the group R.U.P.E. who was the new economy tailored towards and what industries experienced growth? What was the effect of the IMF loans by 1995? How does this trajectory parallel the US?

Describe the “privatization trap.” What is the rationale given for structural adjustment programs? What is their real effect? How does Helen Caldicott describe their effect on women?

How does the “economic miracle” of privatization work? How did the income gap change between 1980 and 1999? By 2006 what statistics does the World Bank give for world distribution of household wealth? In David Graeber’s book Debt, he describes the debt policies of governments and religions to consider all debts cancelled when twice the borrowed sum had been repayed. How would this change Third World debt? Should First World banks have to repay the excess?

Why are India and China not poster children for the success of IMF/WB policies? What percent of India’s banks were still government-owned by 2006? How have India’s public sector banks fared, both in public opinion and in performance?

Greg Palast, who wrote the article that first alerted me to the significance of the petrodollar, describes the difference between India’s states. How does Bangalore differ from Andhra Pradesh? Would the division of India into sovereign states benefit the poor? Why or why not?

What is Vision 2020? What has the effect been? What are the four things that, according to an article in Sustainable Economics, laws and policies will rob from the poor? What are three ways it will do this? How is my A 2020 Vision the exact inverse? Are “freedom zones” like sovereign states would be?

What is the BIS? Define the Basel norm. How did it affect Indian farmers? How has the credit debacle affected India’s public sector banks? Are microloans the answer or even a step in the right direction?

10. What is GATT? What does the WTO require the laws of every member to conform to? What is the New World Order a road to, according to critics? How did Bob Djurdjevic compare the NWO to the British empire? How does the IMF figure in?

Section IV: The Debt Spider Captures America

Chapter 29: Breaking the Back of the Tin Man: Debt Serfdom for American Workers

What was the US debt by 2004 and how did it compare to the Third World? What is it now? What was the 2005 ratio of US debt to GDP? What is it now? What does this make the US and what does that mean? Is it realistic to call the US the wealthiest country in the world?

What will happen if the US declares bankruptcy, according to Mike Whitney? What did Catherine Austin Fitts call what is happening? What is that?

How had the wealth gap widened between 1989 and 2004, according to the Federal Reserve? How did it change from 1997 to 1998 according to Forbes? Two books with more information include The Missing Class: Portraits of the Near Poor in America by Katherine Newman and Victor Tan Chen and (Not) Keeping Up With Our Parents by Nan Mooney. This table shows the income difference in LA in 2003. Could we get information for our counties?

How were personal bankruptcy filing affected from 1995 to 2005, and how many people filed for bankruptcy in 2004? How does Chapter 13 differ from bankruptcy?

What is the homestead exemption? How have new provisions eroded this protection? What is a “deficiency” and does California have an anti-deficiency law? How does the home equity loan push resemble the 1920’s? How did this contribute to the Great Depression?

What change was made in bankruptcy law for insolvent corporations? Why haven’t states addressed the resulting problems? How has Warren Buffett described what America is becoming? What term does Paul Krugman use? Why isn’t the US working class mobile? Why don’t the loopholes that apply to tax havens and corporations apply to municipalities, counties and states?

Who was the 2005 bankruptcy bill written for? What did credit card debt reach by 2003? What’s the average debt carried by the 60% who don’t pay off their credit cards monthly? How do Elizabeth Warren and her daughter describe the target of credit card companies in her book The Two-Income Trap?

How have spending patterns changed in one generation, according to Warren and Tyagi? Would it solve the problem to double the cost of food and goods and cut the “unaffordable 4H: housing, healthcare, higher education and hope for retirement” in half? How did the Hazard Circular compare slavery to debt?

Why doesn’t the time-value argument for interest hold water when it comes to credit cards and commercial banks? How does a credit card work? How does the monetization of debt differ from a loan between persons? What did credit card profits rise to in 2006?

Who was the “Benjamin Franklin of Japan” and what did Japan learn from Henry Carey? How was this information used to redistribute land from the samurai nobles?

How did the “state-guided market system” overcome the defects of the communist system? How does this relate to the US military-industrial complex? Could we do the same to buy out our samurai class?

Why were the “Tiger” economies of East Asia an embarrassment to the IMF free-market model? What did Washington pressure the Bank of Japan to do, and what was their rationale?

When Tokyo tried to deflate the speculative bubble that resulted how did Wall Street react? Within months how much did the Tokyo market lose?

What bank was involved in the currency attack on Thailand? How did Chalmers Johnson describe what followed with Indonesia and South Korea?

What did Japan propose to defend against this? How did Mark Weisbrot describe the effect of the IMF’s fiscal austerity measures?

If the money transferred into private hands had been distributed to those below the poverty line, how much would it have been per person? How did Michel Chuossudovsky define the twentieth century conquest of nations? What did the Asian crisis mark the end of?

What did Malaysian Prime Minister Mahathir Mohamad contend about the IMF? How did he characterize the role of his country and on what did he blame the collapse of Asian currencies?

What did Mahathir impose? How did it affect the ringgit, Malaysia’s currency? What did Joseph Stiglitz say about this?

How is China a threat to US national security? How did Britain deal with this same threat? What did it result in?

Who led the revolution that overthrew 2000 years of Chinese imperial rule? Who was he a protégé of? What were his “Three Principles of the People” based on? How did Hawaii become the base of a Chinese revolution?

When the Chinese Republic become the People’s Republic what happened to this monetary system? Who issued the renminbi or “people’s currency?”

How did the Western embargo affect China? To what level did their economic growth go to? Is this entirely because of low-wage labor? Why or why not?

How does Henry C. K. Liu distinguish between national banking and central banking? When the People’s Bank of China became a central bank in 1995 did it change its function? How did Liu say it would shift?

What other monetary policy distinguishes China? How has it avoided speculative raids?

Describe how the story of Mr. Wu explains “the Chinese miracle.” Compare the US federal debt and the Chinese national debt.

Discussion question: Should the banks and local governments be one and the same? Is it the primary job of a monetary system to recycle money?

How are tax cuts apportioned in the US and China? What are the drawbacks in China? Do they have their own “unaffordable 4H – housing, healthcare, higher education and hope for retirement?”

How would Keynes explain that inflation has stayed low even while the M2 money supply of China has increased by 18.8%? What is the ideal that Germany achieved in four years? Why does China need to export instead? Is there an alternative?

How does China get US securities, US technology and oil while printing up its own sovereign currency? How could China or Japan inflict more damage on the US than a nuclear strike? Which is more dangerous – China or Japan buying US debt with their fiat currency or the US buying out their own debt with US fiat currency?